Nifty may see 5800-6000; but 5600 is crucial: Sampriti Cap

The Indian market has been on a strong wicket due to favourable global as well as domestic cues.

In an interview to CNBC-TV18, Sandeep J Shah, chief executive officer of Sampriti Capital says he would watch 5,600 carefully. "I had mentioned about a month back that we could even get to 5,800-6,000, if we saw easing by the ECB, we saw QE and we saw the government acting. It looks like, in some sense, all three engines are firing. So that possibility is very much alive now," he adds. Also read: Don't chase market, see no trade today, says Sudarshan Sukhani Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy. Q: What is your call on the Nifty now? A: I had given a target of 5,400-5,600, when the Nifty was at 4,700. So, my target has been truly hit. I had also been saying at 5,000 Nifty that we are in a make or break situation, globally and locally. We are obviously in a make situation globally as well as locally now. I would still be looking for the market to actually break out of this 5,600 range. I think we will need a little bit more. A Rs 20,000 crore cut in the fiscal deficit is certainly a welcome move, if that’s the number that we finally end up with. Even if it’s close to Rs 15,000 crore because of a partial diesel rollback, I think it’s still something to be happy about. I think that the medium-term impact of the QE is going to be inflationary, but that’s going to take some time. I think the initial impact and the initial reaction will be positive. The government will need to do more, by way of more sentiment boosters, whether it’s FDI in aviation or multi-brand retail. Those are pure sentiment boosters. But I think, at this stage, sentiment boosters are as important as actual events that have an economic impact because of the pure strong negative sentiment. I think it’s important to realise that excise collections have started showing an increasing trend. I don’t know if that’s going to be sustainable or not. But even if you look at the IIP numbers, which we all berate, they also seem to suggest a bottoming out of industrial production. The PMI numbers are also reflecting that. So, to that extent, I think a smallish bounce back in the economy is possible, if nothing else, purely driven by change in sentiment and the fact that globally the worst case nightmare of an Euroquake is no longer something that most people are worried about, at this stage, that could change overnight. From that perspective, watch 5,600 carefully. But as more positive events pan out, I think we could break out of this range. I had mentioned about a month back that we could even get to 5,800-6,000, if we saw easing by the ECB, we saw QE and we saw the government acting. It looks like, in some sense, all three engines are firing. So that possibility is very much alive now. _PAGEBREAK_ Q: If we do make this dash towards the year highs and then perhaps even scale it to 5,800, where do you see the most lucrative opportunity to put in your money, at this point, for the late comers? A: There still isn’t an investment case to get into capital goods, infrastructure or the beaten down sectors, except as a pure trading opportunity. Whether that trading opportunity manifests or not and to what extent it is done is a function of other events as well. I think all you can do is continue to be with quality companies, companies where there is earnings growth and cash flow. I think it’s not just that FMCG, pharma and IT sectors are doing well. Wherever there is a sustained earnings growth and where the company is generating cash, I think those stocks are doing well. There is, in that sense, a scramble for such companies. We have been bullish on midcap consumer and pharma space. That continues to do well. I would continue to expect that money would continue to chase some of those stocks, even as some of the largecaps, in the sector, get to be reasonably valued or fully valued. I would like to highlight, which I have been saying for sometime, that we still don’t have a bubble in consumer stocks. There is no bubble in pharma stocks. This market is perhaps, in a sense, more similar to the kind of tech market we had in 2000 where you just had one or two sectors doing well and the rest of the market being in a bear market. We saw obscene valuations, bubble like valuations. I don’t think we have those kind of valuations here. So, you might still see a pop up in some of the sectors that have done well. You could perhaps also look at two wheelers; something that we have been willing to look at like Bajaj Auto, outside of the classical so called defensive.